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South Asia Investor Review is focused on reporting, analyzing and discussing the economy and the financial markets of countries in South Asia, including Pakistan, Bangladesh and Sri Lanka. For investors looking to invest in emerging markets beyond BRIC countries (Brazil, Russia, India and China), this blog is designed to help international investors looking to learn about investing in South Asia with focus on Pakistan. Riaz has another blog called Haq's Musings at http://www.riazhaq.com

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Modern economies and markets are largely driven by business, investor and consumer confidence. The movers and shakers of business and investment world look to the national political and economic leadership and their pronouncements and actions for cues on what is to come. When they sense a lack of competent leadership, their confidence drops and the markets and the economies come crashing down, as has been observed in Pakistan recently.

In his first comments about Pakistani economy since the formation of PPP-PML(N) coalition government, the PPP co-chairman Asif Ali Zardari told a press conference on May 17 that the economy is headed toward "meltdown". These remarks came immediately after Finance Minister Ishaq Dar had pulled out of the cabinet on the issue of the judges restoration. Yesterday, Nawaz Sharif said that Pakistan’s ruling coalition had agreed to “expel” President Pervez Musharraf from power, further contributing to market unease.

A relatively new, aggressive strain of black stem rust, called Ug99 for its 1999 discovery in Uganda, has spread to Kenya, Ethiopia, Yemen and Iran. Most commercial wheat grown world-wide has no resistance to the disease. The threat comes at a time when wheat stockpiles have shrunk because of bad weather and strong demand for wheat-based foods, reports the Wall Street Journal this morning.

Ug99 poses a more serious threat to commercial crops than even the U.S. black-stem-rust epidemic of 1954 that destroyed 40% of the U.S. wheat crop, experts told the Wall Street Journal.

Fears that the disease may have spread to Pakistan haven't been confirmed, experts say, but Pakistan is a concern because of its proximity to India, the world's third-largest wheat producer with over a billion mouths to feed.

The potential for crop loss in Africa, the Middle East and South Asia is higher. Based on wind patterns and the rate of spread, the United Nations Food and Agriculture Organization says co…

On the day of our departure for Jeddah, with our bags packed and goodbyes dispensed with, our group found itself together at the coffee shop of the hotel. There each one of us talked about whether this trip had changed our opinions of Pakistan and its people.

This is a country of about 160 million people scattered about four provinces and Azad Kashmir. As the world's fifth largest democracy, Pakistan has had its share of questionable leadership, but there is enough evidence that the country's progress had not taken a back seat.

We all agreed that the media had been over blowing Pakistan's lack of safety and security. Never once had we felt threatened for our personal safety during our entire trip, and there were many times when individually we would set off on our own to the busiest sections of the cities we had visited.

Nether were our pre-visit ideas about a dirty and poor country justified, for we saw enough to prove otherwise. The infrastru…

The Karachi Stock Exchange's 100 share index lost 615.26 points, 4.5%, to an eight month low of 13,011.74. The KSE index is now down 17% from its peak at the end of April amid growing loss of confidence in the country's leadership.

The latest drop in the KSE-100 was triggered by the country's central bank's decision to raise interest rates to 12.5% from 10% to slow the inflation rate. However, the key issue for business and investment community in the last few months has been growing anxiety over the lack of economic and political leadership. Finance Minister Ishaq Dar's ill-advised and ill-timed statements talking down the economy have also contributed to the loss of confidence in the Pakistani markets. The result has been the flight of capital from Pakistan. Instead of continuing to invest in Pakistan, the capital is now flowing away to the Gulf and invested in real estate by Pakistanis.

A recent report on Pakistan’s Geo TV said that Pakistani real estate companie…

South Asians in Silicon Valley had a big weekend with both TiE(The Indus Entrepreneur)and HDF(Human Development Foundation)holding their annual events. These events brought out the powerful, rich and famous with origins in the sub-continent including former Pakistani Prime Minister Shaukat Aziz, Lord Nazir Ahmad and celebrity politician Tariq Aziz. While Mr. Shaukat Aziz was the keynote speaker on Thursday evening at the TIE Global charter member reception, the Human Development Foundation annual fundraiser was addressed by Lord Nazir Ahmad and Tariq Aziz, among others.

TiEcon 2008

Mr. Shaukat Aziz was warmly received by the The Indus Entrepreneur charter members as he spoke about the opportunities for American and South Asian entrepreneurs and investors in both India and Pakistan. "They can help lower the temperature and build trust, which is needed to resolve disputes," he said of TiE effect on the political animosity between India and Pakistan.

Richard Spinks, a 41-year-old British entrepreneur, is going door-to-door, leasing small plots of land from hundreds of thousands of poor farmers in western Ukraine. His company, Landkom International PLC, has planted wheat, barley and rapeseed (aka Canola) on a combined 25,000 acres. Landkom expects to reap its first big harvest this fall, according to the Wall Street Journal.

The Wall Street Journal believes that with the world food crisis becoming acute, entrepreneurs see opportunities to tackle it and make big money. Such efforts could give a much-needed boost to feed the growing population of the world. For years, big agribusiness companies have used new seed and fertilizer varieties to push yields higher. But as technology gains have slowed, the search for additional arable land has intensified. That's created an opening for entrepreneurs with visions of re-collectivizing the land in former communist countries and boosting production.

While the term "energy security" has been in vogue for many years, the term "food security" seems to be competing with it for an equal or higher ranking on the world agenda. Food Security is particularly high on the list for countries such as China with the world's largest population to feed and the Middle East nations such as Saudi Arabia and Libya who depend on imported food.

So what are these countries doing? They are acquiring farmland in the nations considered world's breadbaskets. Countries in Africa, Latin America, and Eastern Europe who have plenty of farmland but not a lot of money. While these efforts will help increase food production, a downside of an aggressive policy for more farmland is that it will accelerate deforestation and hurt the environment.

The Chinese agriculture ministry has drafted a proposal to support the acquisition of farmland, especially in Africa and South America, to help guarantee China's food security, the Financial Ti…

Bill Emmott, a former editor of The Economist and a longtime Asia-watcher, says in his recently published book "Rivals" that China will continue its remarkable rise for years to come. But he thinks that a modernizing India and a resurgent Japan could end up jostling for supremacy in Asia, pitting "Asians against Asians." A balance-of-power politics could evolve resembling Europe's in the 19th century.

Talking about the Bush administration's growing ties with India, Emmott says the US recognize the fact that while Al-Qaeda and its cohorts pose the biggest short-term and perhaps medium-term challenge to America, in the long term it is the expected shift in the world’s economic and political balance towards Asia that promises to have the greatest significance.

Economists at Goldman Sachs estimate that if China continues with pro-growth policies and manages its economy reasonably well, it could overtake the United States as the world’s biggest economy by 2020. By…

When Intel puts its weight behind an initiative, it automatically gets a boost. But when Google and Intel together join forces, no one in their right mind can bet against such a combined force. Mobile Internet with broadband access has achieved that inevitability with Google backing a Wimax joint venture between wireless veteran Craig McCaw's Clearwire and Sprint-Nextel. In addition to Intel and Google, this venture is also supported by Comcast and Time-Warner.

As the world goes mobile, Intel's objective is to extend its leadership position in platforms used to access the Internet. Google is aiming at capturing the huge market for mobile advertising that is likely to grab a increasingly larger share of online advertising revenue.

The wireless carriers such as Verizon and AT&T have long been busy building walled gardens and controlling the distribution and content of mobile platforms. On the other hand, Intel and Google have long been arguing for an open model similar to t…

Pakistani Rupee has hit a new low at Rs. 66.00 for a US dollar. The rupee decline seems to have accelerated recently against a weak US currency amid reports of rising imports, stagnant exports and falling foreign exchange reserves held by the State Bank of Pakistan.

“The fast erosion in the central bank reserves is creating pressures on the rupee,” the treasury dealer Rehanuddin at Invest Cap told the Gulf Times.

The central bank has so far lost around $4bn in the last five months to $12.65bn this week over $16.48bn on October 31. Analysts say the reserves will dwindle to $10bn by the end of the fiscal year on June 30. “Political uncertainty, lack of foreign investment and import pressures have badly hit reserves,” Aqeel Ahmed, senior analyst at First Cap Securities, said.

"The import pressure is rising rapidly on high oil prices, our exports are not increasing due to food shortage while foreign investment is also slow and all these factors are contributing to the weaknesses of th…

Until mid-2007, foreign investment in Pakistan rose steadily. For the fiscal year that ended in June 2007, the country received $5.2 billion in foreign direct investment and $1.8 billion in portfolio investment. The investors have turned lukewarm since the second half of last year. In the eight months that ended in February, foreign investment was just two-thirds what it was in the same period one year earlier.

At the Karachi stock market, the numbers continue to look good. Even with the turmoil of 2007's last months, the KSE 100 index was still up 40% for the year. And its performance so far in 2008 compares very well not just with Western markets, but with the Bombay Stock Exchange's Sensex index, which has suffered double digit drop.

While the new government of Prime Minister Gillani faces many economic challenges including food and energy crises, the expectation of relative stability is likely to spur foreign investors to start pumping money back into the Pakistani economy.

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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